Formula E: Crazy Rich Spanish Idea Snatched By DKI Jakarta Rulers

Formula E racing that has invited a lot of controversy since its inception. (Photo: Doc. Formula E)

JAKARTA - In the last two years, Formula E has become a hot issue that is constantly being talked about in Indonesia, especially DKI Jakarta. The trade name for the electric car race was discussed from various sides, ranging from technology, economic value, to politics, linked to rumors of Anies Baswedan's campaign as a presidential candidate for 2024.

Formula E was born out of the rebellion of Alejandro Agag. Crazy rich from Spain, who is also a former racer, is the owner of the Addax Racing racing team, which competes in the GP2 racing event (an event that supports Formula 1 racing). Born in Madrid on 18 September 1970 Agag fathered Youssef Agag of Algerian blood, and his mother was a Spanish woman named Soledad Longo.

DKI Jakarta Governor Anies Baswedan when meeting with Formula E CEO Alejandro Agag in New York, 2019 (Photo: Instagram @aniesbaswedan)

In 2011 Agag had a discussion with Jean Todt who was then President of the International Automobile Racing Federation (FIA) to create an electric car race with the highest level in the world. Because of the rumors, Agag was later removed by the Formula 1 godfather, Bernie Ecclestone. The Addax team was removed from the Formula 1 support race list, which at that time consisted of the Porsche Series, GP3, and GP2.

The 2012 Formula 1 racing season was the last time Addax Racing participated in the GP2 Series, with one of the drivers being Rio Haryanto. In 2013 Addax Racing officially went out of business, but Agag kept going with his new project: Formula E. Called formula racing, because it uses an open wheel type car or without fenders and an open driver cockpit.

Electric Car Racing Debut

Agag's original idea for Formula E was to combine auto racing with the energy of a sustainable future. Agag has an idealism of abandoning fossil fuels which he considers ancient. The cynicism and opposition actually made Agag more desperate, his entrepreneurial spirit even more challenged.

“As the head of a family, I want to contribute to preserving the world for future generations. Given climate change, I don't think Formula 1 is appropriate for today's times. "Electric mobility is the future, and in the end I have to practice what I really believe in," Agag was quoted as saying on the FIA website.

Ownership of Formula E. (Photo: Doc. Formula E)

Although there are no participants, teams, riders and circuits yet, Agag continues to advance with the concept. He was finally able to partner with a private bank from Zurich, Switzerland, Julius Baer.

“As a leading private bank, we have a great interest in investing that is sustainable and has a positive impact on the future. We realized the huge potential of Formula E, so we supported it from the start," said Gian Rossi, Head of Julius Baer Switzerland.

Julius Baer has supported Formula E since the debut of the electric car racing series, namely the Chinese GP at the Beijing Olympic Park on September 13 2014. Their partnership continues to this day. Two years later, Formula E received the addition of a major sponsor which became their title racing series, A SEA Brown Boveri (ABB), a Swiss-Swedish joint venture engaged in the robotics, electricity, electric heavy equipment and automation industries. ABB became the title sponsor of Formula E.

Haven't Earned yet

Since its racing debut in 2014 until the sixth season of 2019, Formula E has not made a profit. In fact, from the start, many observers predicted that this electric car racing series would be over in just a matter of months. It turns out that Agag failed all predictions, because the existence of Formula E still continues to this day. In contrast to racing A1 GP for example. One of the formula racing series that was brought to Indonesia that went bankrupt in just 3 years, 2005-2008.

In an interview with Forbes in 2019, Agag said that Formula E, which is run by a British company, Formula E Operations (FEO), was a loss in its first six years. The loss was no joke, 155 million US dollars or around Rp. 2.2 trillion!

“We could have broken even this year, but we decided to invest more in marketing and promotions. It's up to us when we want to break even or not. We could be at break even now, we could be at break even next season, but we may decide to invest more in marketing and promotions," Agag explained as quoted by Forbes on November 24, 2019.

2015-2018 Formula E revenue. (Photo: Doc. Formula E)

In the 2018-2019 racing season, for example, Formula E spent US$171.9 million (approximately Rp2.5 trillion) in capital, but only earned US$143.5 million (approximately Rp2.05 trillion) in revenue. They lost 28.4 million US dollars or around Rp. 406 billion!

In May 2018 Agag offered US$660 million, or around Rp9.4 trillion, to buy all of Formula E's shares. However, the offer was rejected by shareholders. The shareholders preferred to find a new CEO and ended up getting Jamie Reigle, a Canadian who was a former senior executive at football club Manchester United.

Agag was kicked out of the CEO position at the end of 2019. He now has a new toy that is also still related to electric car racing, namely Extreme E. This is an electric car race in offroad terrain.

Reigle's task was not easy, as he had to rebuild Formula E, which was affected by the COVID-19 pandemic at a time when the racing business had not yet made a profit. Not to mention the three well-known car manufacturers: BMW, Audi, and Mercedes Benz have announced that they will leave this racing series after the 2022 racing season.

Now there are only six car manufacturers that support Formula E, namely Mahindra (India), Nissan (Japan), Jaguar (UK), DS Automobiles (France), Porsche (Germany), and NIO (China).

Unable to Boost the Economy

The idea for holding Formula E in Jakarta came from Anies, when he visited New York, USA on June 13, 2019. Initially, the Governor of DKI Jakarta wanted to hold a race in 2020, but the COVID-19 pandemic made his plans cancel. Until finally, this year Formula E Jakarta is scheduled to be held in Ancol on June 4.

On August 13, 2019, Anies claimed that he needed a budget of US$ 24.1 million or Rp. 343 billion to host the Formula E race. Not to forget he also emphasized the great benefits for the Jakarta economy, which has the potential to generate revenues of up to Rp. 1.2 trillion.

It's a bit difficult to understand, from which post Formula E Jakarta will make a profit. Formula E owners themselves have not felt the benefits. Boro-boro profit, not even break even. Only one Formula E event is claimed to be profitable, namely Formula E London, which will be held from 24-25 July 2021.

One of the participating teams in Formula E, TAG Heuer Porsche. (Photo: new.abb.com)

Mayor of Montreal, Valerie Plante in 2017 confirmed the suspension of Formula E in her city. Formula E Montreal is held from 29-30 July 2017 and is expected to make a good economic contribution to Montreal, as has the Canadian GP Formula 1 racing which has been held since 1961 in the city.

The reality faced is 180 degrees different, because Canadian Formula E actually resulted in losses of up to 35 million US dollars or around Rp. 501 billion. Montreal It's Electric, which was entrusted with the task of providing electricity for the 2017 Formula E Montreal race, actually left a debt of nearly 15 million US dollars, or around Rp. 214 billion. Formula E Montreal was stopped after only being held once.

"Montreals don't want their money to be wasted on a project that is poorly planned, and completely useless," Plante said.

Formula E Jakarta is also predicted to only generate income of no more than Rp600 billion from the capital issued of around Rp1.6 trillion. After all, the plan went ahead even though the polemics that accompanied it did not stop.